Paris: Senior executives of automakers such as Renault Groupe of France and Daimler AG of Germany said they will have to reduce their exposure to diesel cars as such vehicles won’t make a compelling business case in the coming years.
Carlos Ghosn, chairman and chief executive at Renault-Nissan-Mitsubishi alliance and Dieter Zetsche, chairman of the board of management at Daimler and head of Mercedes-Benz Cars, expressed their apprehensions Wednesday on the future of diesel vehicles.
As diesel vehicles become increasingly expensive due to stricter emission and fuel efficiency norms, companies are looking at hybrid and electric cars as an alternative. The scarcity in supply of lithium-ion batteries, electric motors and other parts is however causing concern.
Ghosn said Renault has been comparatively affected more by the shift in preference from diesel as it has a strong portfolio of diesel vehicles in the entry-level and middle segments. It therefore plans to cut its exposure to diesel, he said.
“We have started investing heavily in electric and hybrid cars which will allow us to make this transformation particularly in segments where we think diesel has no future,” said Ghosn at a joint press meet with Zetsche to review collaboration between Daimler and Renault-Nissan-Mitsubishi alliance and ways to cooperate further.
Electric mobility is a highlight at the Paris motor show with companies such as Mercedes-Benz, BMW, Renault, Hyundai Motor Co. and Kia Motors Corp. showcasing mostly electric and hybrid vehicles.
Nissan Motor Co. has already ceased sales of diesel cars in Europe given reduced demand. Others such as Jaguar Land Rover are meanwhile stepping up their plans for alternative fuel vehicles.
“First of all diesel engines have become more expensive. When you are going to the entry segment of cars, its about viable business case for the customers and in the entry segment, it’s becoming difficult to make it a viable business case for customers,” said Zetsche at Daimler.
He said “diesel engines will have a future but not in all segments of course. But in trucks and mini trucks.”
Renault unveiled an electric hatchback based on the Kwid platform which will be developed and sold in China from next year. Renault will be the first foreign company to enter the affordable electric vehicle market in China.
Automakers are also grappling with the effects of the tariff war started by US and the likely impact of a hard Brexit especially on companies such as Nissan and Renault who have factories in the United Kingdom.
Both Ghosn and Zetsche are of the opinion that the recent trade agreement between US, Canada and Mexico will help establish a sense of certainty needed to invest more.
Also, carmakers should become flexible in expanding their capacities in varied regions to insulate from any adverse impact in such circumstances, they said.
The writer was in Paris at the invitation of Renault India.